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If you've been following the MBS Commentary, you know what a big deal this afternoon could be. Markets have been preparing for it for weeks and MBS Live members have been on top of those movements every step of the way.

This afternoon, when markets are convulsing mere milliseconds after the Fed Announcement, MBS Live members will know what's going on before anyone else. The accuracy and speed of our real-time price stream and alerts is unmatched.

Trading so far today has represented a slight extension of yesterday's weakness and hopefully, that's all! Looking at price movements beyond today is a bit depressing as the entire week has been a downtrend for MBS and an uptrend for Treasury yields. The day-over-day change in MBS (2-3 ticks at the moment) seems minimal, but is somewhat deceiving considering we went out at the weakest levels of the day yesterday. From yesterday's rate sheet time, we're down about three-eighths of a point. So yes, a slight extension of yesterday's weakness, but yesterday was pretty weak! At the moment, we're eyeing yesterday's lows as a short term inflection point, hoping NOT to see yesterday's floor become today's ceiling, though that's exactly what's been happening so far today. Economic data has done little if anything to inform that movement as markets are more driven by trade-flows and somewhat distorted by waning pre-holiday illiquidity. There's a 10yr TIPS auction to take down at 11:30am as well, which could have more of an impact than the econ data.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this morning.

10:50AM :
ECON: Consumer Sentiment Slightly Lower Than Expected

- 82.7 vs 84.5 consensus
- Expectations 77.6 vs 80.1

- (Reuters) - U.S. consumer sentiment stalled at the end of November as uncertainty grew over federal tax and spending programs next year, a survey released on Wednesday showed.

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment came in at 82.7, a touch up from 82.6 the month before, but down from a preliminary reading of 84.9 released earlier in the month.

It was below the median forecast of 84.5 among economists polled by Reuters.

"The late-month retreat was accompanied by more economic uncertainty about future federal taxes and spending programs and the inability of the political parties to reach a settlement," survey director Richard Curtin said in a statement.

It's been a mostly unpleasant morning so far with some potentially disconcerting price action in MBS. Fannie 3.0s are currently struggling to get back above yesterday afternoon's lows. Even though we came in at 104-23, we quickly moved lower and have since seen several instances of resistance at 104-22, the same level that provided a firm floor of support yesterday afternoon.
That's a classic ratcheting technical movement that, at the very least, sets up 104-22 as an important level to watch for the rest of the day.

Things are somewhat similar in Treasuries, though the weakness is slightly more pronounced. Bond markets showed their hand early in the overnight session after Germany's Schaeuble said that there is no agreement coming this week on Greece and that Eurozone Finance ministers would meet again on Monday. At first, markets took the news poorly with equities futures dropping 10 S&P points in the blink of an eye. 10yr yields were a bit more sober in response, merely shedding 3bps. But it's the bounce that's more telling.

After losing ground initially on that news, bond yields and stocks both began rising steadily. Stocks leveled off somewhat into the domestic open and Treasuries did not (although they might be now, fingers crossed). The pops in price action and volume came NOT on the economic data, but rather were purely driven by tradeflows. Bottom line, accounts are lightening up on positions heading into what, for many, will be a four day weekend.

Please note, that does NOT mean we should simply tune out and disregard the negative price action today, hoping that everything will "go back to the way it was" on Monday. The unfortunate reality is that things can always go either way. Even if there's a temptation to "hope" that things turn around when markets get back to business next week, they'll be doing so from a point of greater neutrality, leaving the door equally open to re-engage longs or continue the sell-off.

9:07AM :
ECON: Markit PMI Slightly Higher

- PMI 52.4 vs 51.0 Consensus

Key points:

PMI signals moderate improvement in manufacturing business conditions

Both output and new order growth quicken to five-month highs

Strongest rise in employment since July

Average input prices increase markedly

The Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™)1 signalled the strongest improvement in U.S. manufacturing business conditions for five months in November. The preliminary ‘flash’ PMI reading, which is based on around 85% of usual monthly replies, rose to 52.4 from 51.0 in October to indicate a moderate manufacturing expansion overall.

In the week ending November 17, the advance figure for seasonally adjusted initial claims was 410,000, a decrease of 41,000 from the previous week's revised figure of 451,000. The 4-week moving average was 396,250, an increase of 9,500 from the previous week's revised average of 386,750.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending November 10, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 10 was 3,337,000, a decrease of 30,000 from the preceding week's revised level of 3,367,000. The 4-week moving average was 3,285,000, an increase of 19,500 from the preceding week's revised average of 3,265,500.

BVG : "Good to have a lender that allows locking on weekends---just in case of increased turmoil/Company tapebomb, etc"

Adam Quinones : "where is the LIKE button...."

Matthew Graham : "adding final 2 cents to previous convo, bottom line, there are only ever "probably's," but those aren't the kinds of things I'd want to lean on in making much of a change to my overall lock float strategy. Highest/Best use of this site is INTRADAY reprice risk. How you lock/float over the weekend is a much more individual decision and one that I couldn't speak to without saying that there's ALWAYS a risk that things keep getting worse,"

Ira Selwin : "Half day on Friday - early market close"

Ira Selwin : "Technically a full day, but half day for alot of people"

Joe Probst : "Is this a half day? And if I don't get a chance to tell everybody. Have a safe and happy Thanks Giving.."

Michael Gillani : "I agree with you MG. GUTFLOP it is! I have lived by that over the past year + and it has served me very well!"

Matthew Graham : "now you're talkin"

Ken Crute : "GUTFLOP "

Matthew Graham : "again... there's no way to say such a thing because there's no way to get that consensus without soliciting the input from every member. Even then, it's foolish to base your own pipeline decisions on the perception of the majority stance."

Gus Floropoulos : "MBS Live consensus is to FLOAT"

Tom Schwab : "agreed, waiting until Monday allows Greek issues and Gaza strip to possibly help as well as traders coming back form vacation"

Matt Hodges : "i wouldn't be locking today, personally"

Jason York : "I would agree with that statement, unless you have something that doesn't have time"

Michael Gillani : "So is it somewhat safe to say that Monday will be the next real trading day and it's safe to float most likely if not already locked?"

Matthew Graham : "problem is that they all took their long positions with them just before they left."

Lion : "MG-What markets, everyone's gone home already"

Matthew Graham : "and we weren't really expecting it to"

Matthew Graham : "market's not trading the econ data. "

Michael Gillani : "I know PMI was slightly better than expected, but with jobless claims still over 400k and last weeks already year high number revised 20k higher, how is the market taking a positive spin?"

About the Author

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators.
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